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US tariffs on $200bn in Chinese goods take effect

The tit-for-tat moves are the latest escalation in trade war between the world's two largest economies.

Chinese imports

The United States government has "abandoned the fundamental norms of mutual respect" after a new round of tariffs came into effect on Monday, China said in a document released as a response.

The US tariffs will affect Chinese products including food seasonings, baseball gloves and parts for industrial machinery, while US-made chemicals, clothes and car parts will be subject to the Chinese levies, moves that further escalate the ongoing trade row between the world's two largest economies. 

On September 17, US President Donald Trump said he would impose 10 percent tariffs on about $200bn worth of Chinese products, prompting retaliatory measures from Beijing.

In a statement the following day, the Chinese finance ministry said it "had no choice but to respond with its own tariffs" which fall at five or 10 percent and affect some 5,200 US products. 


READ MORE: China summons US ambassador over military sanctions


Responding to the new tariffs, China released the document in which the government stressed the importance of a good trade relationship between the two countries.

In it, China talks about the last couple of decades during which the two countries grew closer with regards to trade and diplomacy, and how the current US administration has "abandoned the fundamental norms of mutual respect and equal consultation that guide international relations", according to Xinhua news agency.

"Rather, it has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure," the document read.

China also announced it was lodging a new complaint with the World Trade Organization in its tariff battle with the US, and on Monday it released an extensive white paper in which it commented on the actions of the US administration and specifics about US-China trade. 

The two sides already traded tariffs on $50bn worth of goods from each country earlier this summer.

On Thursday, in a first, the Trump administration imposed sanctions on a unit of China's defence ministry for buying fighter jets and missiles from Russia.

Trump has warned tariffs would increase to 25 percent by January 1 unless the US and China reach a trade deal, which was expected to be reached at a meeting in Washington, DC, later this month.

But, China on Saturday scrapped its trade talks with the Trump administration and is unlikely to hold any meeting before the mid-term elections in the US due in November.

Dan Wang, analyst with The Economist Intelligence Unit, said from Beijing that the trade war was likely to escalate further.

"Over time more of the corporations are going to think about moving part of their supply chain or an entire factory out of China. And that would trigger more of a serious response from the Chinese government in terms of policies to welcome foreign capital."

The US would become more stringent over Chinese investment into the United States as well, said Wang.

"So both sides [will refuse] to back down. And the time of the corporates that are caught in between will be even harder with the Chinese economy slowing down. So eventually China will have to look elsewhere to expand its market."

White paper

The white paper focused on the importance of US-China trade cooperation, saying it is mutually beneficial and a win-win for not only those two countries, but the whole world.

"As a result, trade and economic friction between the two sides has escalated quickly over a short period of time, causing serious damage to the economic and trade relations which have developed over the years through the collective work of the two governments and the two peoples, and posing a grave threat to the multilateral trading system and the principle of free trade," it continued.

China also claimed it has been trying to find common ground in an attempt to solve the issues with the US.

"It [the government] has overcome many difficulties and made enormous efforts to stabilize China-US economic and trade relations by holding rounds of discussions with the U.S. side and proposing practical solutions."

Tariff showdown

Trump has said the US tariffs are designed to force a change in Chinese trade policies, which he says pose "a grave threat to the long-term health and prosperity of the United States economy".

In an interview with Fox News on Sunday, Secretary of State Mike Pompeo said that the US is "going to win" the so-called trade war.

"We're going to get an outcome which forces China to behave in a way that if you want to be a power - a global power - transparency, rule of law, you don't steal intellectual property," he said.

Previous US administrations have accused China of stealing technology by forcing firms to reveal secrets as a condition to operate in the Chinese economy. 

Greg Swenson, founding partner at mergers and acquisitions firm Brigg Macadam, said that while tariffs might not be the best approach, the US is attempting to resolve an acknowledged issue.

"Theft of [intellectual property] is clearly a violation of free and open market. I think there are other ways to deal with this, rather than getting into a trade war, but in this case, it seems to be the only way that's going to get anybody's attention. I'm not sure it's being perfectly executed [...] but I think something clearly has to be done," he said.   

More to come?

Trump has warned any retaliatory measures from China would force the US to "immediately pursue phase three", which is tariffs on $267bn of additional imports.

China's finance ministry said it will respond accordingly if the US further increases taxes. Beijing had previously warned it would target $60bn in US goods if Trump made good on his threat to impose the new tariffs. The lower Chinese figure highlights Beijing's inability to match the US dollar-for-dollar in a tariff war.


READ MORE: China hits back at latest US tariffs with measures on $60bn


On Sunday, in a bid to promote a business-friendly image, Chinese Premier Li Keqiang said the country would cut import and export costs for foreign firms.

"We must strive to improve the business environment and reduce costs for foreign exports by a third, lower customs fees and reduce the time needed to get customs clearance, the government said in a statement.

The US imported about $500bn worth of products from China last year, compared with $130bn in US goods imported by the Asian country.


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